Sales Promotion Chapters 18, 19

Sales Promotion Marketing communication tool that offers sales-related incentives to generate a specific, measurable action or response for a product or service.

Sales Promotion Acts as a marketing communication tool Offers sales-related incentives Generates response or action Produces measurable results Changes the accepted price-value relationship

Sales Promotion STRENGTHS WEAKNESSES Gives an extra incentive to act Changes the price/value relationship Gives sense of immediacy to purchase Adds excitement Stimulates trial Stimulates continuity of purchase or support, repeat purchases Increases purchase frequency and or quantity Promotes reminder merchandise Motivates trade support Builds databases WEAKNESSES Adds clutter Can set false retail price Some consumers won’t buy unless offered a price deal Leads to forward buying by trade members Fraudulent redemption of coupons and theft of premiums Can be difficult to get trade cooperation Can undercut brand images, create brand insensitivity INCREASE VALUE OR LOWER PRICE PRUTING CARS TO PUSH PRODUCT SHIFTING FROM BRAND VALUE TO PRICE MAIL-IN COUPONS SEE EXAMPLES

Sales Promotion Compared to Other Promotion Mix Tools Direct Response (Interactive) Sales Promotion Ad- vertising Public Relations Personal Selling Time Frame short term long term long term short term both Primary Appeal both emotional emotional rational rational Primary Objective sales image/ brand position goodwill sales sales relation-ships Contribution to Profitability high moderate low high high

Push and Pull Strategies Directs Marketing to Resellers PULL: Directs Marketing to End-Users Mass Advertising Coupons Sampling Publicity Trade deals Trade advertising Personal selling Manufacturer Wholesaler Retailer Consumer PUSH PULL PUSH PROMO STRATEGIES BROADLY CLASSIFED AS PUSH OR PULL STRATEGIES PULL -- DIRECTED TOWARD END USERS, LARGER AD EXPENSES, CUSTOMER PULLS THROUGH CHANNELS HIGH DEMAND -- HIGH DIFFERENTIATION PUSH -- DIRECTS MOST MARKETING EFFORTS AT RESELLERS -- PARTICULARLY SALES PERSONS MOST ORGANIZATIONS USE A COMBINATION PUSH

Offer reduced prices in stores Contests Contributions to marketing communication strategy -- 1) Introducing new product Reduced price In-store sampling Special tie-in Coupons Mail samples Offer reduced prices in stores Contests AWARENESS TRIAL

Introducing new product Trade Promotions Trade advertising Trade sales promotion techniques Price discounts Point-of-purchase (PoP) displays Advertising allowances Repeat purchase promotions Coupons Rebates Other rewards HELP GAIN SHELF SPACE WILL COVER IN MORE DETAIL LATER

Contribution -- Brand Building Techniques to enhance brand image Tie-ins (FOR EXAMPLE) Must be part of a strategy to build brand trial and familiarity OFTEN ARGUED THAT PROMOTION DESTORY BRAND LOYALTY -- CHEAPENS A PRODUCT. MANY BELIEVE IT CAN BUILD BRAND LOYALTY IF DONE PROPERLY F. EKS. TIEING PRODUCT WITH AN ALREADY STRONG BRAND CONTINUOUS PROMOTION, PARTICULARY PRICE, DOES NOT ALWAYS WORK. KEY IS MAKING IT PART OF WELL-EXECUTED STRATEGY TO BUILD BRAND TRAIL AND FAMILIARTY

Sales promotion strategy -- Stimulate consumer to act, motivate sales force, gain cooperation of resellers. Goals of proactive, long-range objectives Create additional revenue or market share Enlarge target market Create positive experience Enhance product value and brand equity Goals of reactive (normally negative or short-term situation Match competition Move inventory Generate cash Perhaps go out of business PRIMARY OBJECTIVE OF STRATEGY STATED OVERST. PROMOTIONAL STRATEGY CAN BE PROACTIVE AND LONG-TERM OR REACTIVE AND SHORT-TERM 10.9

Sales Promotion Mix Which to use How to combine How to deliver Separate or overlay OVERLAY -- IN COMBINATION WITH OTHER THINGS 10.4

Sales Promotion Objectives CONSUMER Prompt trial by new users Introduce new or improved products Stimulate repeated product use Encourage more frequent purchase or multiple purchases Keep customers by providing an implied reward Reinforce advertising or personal selling Stimulate trade support TRADE Introduce products to new distribution areas Reduce selling costs Improve working habits Offset competitive promotions Increase sales volume Control inventory Stimulate in-store support Create a high level of excitement among those responsible for product sale 10.12

Trade Sales Promotion -- Resellers Dealer Contests Trade Coupons Dealer Loaders buying loaders display loader Trade Deals Buying allowances slotting allowance free goods allowance Advertising and cooperative advertising allowances Display allowances 10.10

Trade Sales Promotion -- Sales Force Supportive programs Sales meetings Sales kits Motivational programs contests honors clubs push money 10.11

Consumer Sales Promotion Techniques Price Deals Discounts Cents-off Price-pack deals Bonus packs Banded pack Coupons Refunds and Rebates

Consumer Promotions Contests, Sweepstakes, Games Premiums Direct premiums Store premiums In-packs On-packs Container premiums Mail premiums Self-liquidator Continuity-coupon plan Free-in-the-mail premium

Consumer Promotions Samples Continuity Programs Frequent flyer programs Specialties, event sponsorship, licensing